10-year Government Bond rate in USD:
Egypt is 4%
USA is 2%
10-year Government Bond rate in local currency:
Egypt is 6.5% EGP
USA is 2% USD
a (Equity)/a (Government Bond):
Egypt is 1.4
USA is nothing
8. Estimate the Egyptian country's default spread.
9. If the US equity risk premium is 5%, estimate the equity market risk premium for Egypt.
10. Calculate the risk-free rate in Egyptian Pounds.
11. Estimate the cost of equity for Buhoo in Egyptian Pound.
12. If Buhoo has a bond that is traded with a yield to maturity of 7%, what is the after-tax cost of debt? Assume a 40% as the marginal corporate tax rate.
13. If Buhoo plans to maintain the same debt and equity, mentioned in part 7 above, for the foreseeable future, what is the weight of equity capital?
14. Estimate the weighted average cost of capital for Buhoo.